Health — Issue No. 8 — Monday, August 27, 2012 (HTML)

Present: Norm Letnick, MLA (Chair); Mike Farnworth, MLA (Deputy Chair); Sue Hammell, MLA; Dave S. Hayer, MLA; Richard T. Lee, MLA; John Rustad, MLA; Dr. Moira Stilwell, MLA

Unavoidably Absent: Ron Cantelon, MLA; Katrine Conroy, MLA; Guy Gentner, MLA; Colin Hansen, MLA

2. The following witnesses appeared before the Committee and answered questions regarding health care sustainability:

6. Resolved, that the Committee receive the report of KPMG. (Dave S. Hayer, MLA)

7. Resolved, that a Sub-committee consisting of the Chair and the Deputy Chair review the framing of public submissions during Phase 2 and report back to the full Committee. (John Rustad, MLA)

The following electronic version is for informational purposes only.
The printed version remains the official version.

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
HEALTH


CONTENTS
Page
Ministry of Health: Health Care Sustainability Update	35
G. Whitmarsh
M. Burd

N. Letnick (Chair): I'd like to call to order the meeting of August 27 of the Select Standing Committee on Health and thank all the members for coming in on such a beautiful day to share their knowledge and expertise.

The first order of business is to approve the agenda — if I can have a motion to approve the agenda.

I don't see them, or hear them actually, so we'll just keep going. Maybe they'll join us at some point.

The first item of the agenda is to welcome Graham Whitmarsh, the Deputy Minister of Health. Graham, thank you very much for coming. I appreciate you being here again.

Martha Burd, director of the modelling and analysis team — always a pleasure to see you, too, Martha. It's been a few years, actually, since we started talking with each other. Thank you for coming and working with us on the growth in health care demand and providing this update with Graham as well.

My first question to both of you before you start diving into this wonderful work, which the committee members had previously to this, is if we can include your work as an appendix to our report. Is that okay?

N. Letnick (Chair): All right. Thank you very much for that. The floor is yours.

G. Whitmarsh: Thank you, Chair and Members, for the opportunity to come here today and update you. It was a while ago that we gave the first introductory presentation around what was driving the demand in the health care system and the cost pressures that we see throughout the system.

What we plan to do today is to give you an update on the utilization within the system — the numbers that we showed you last time have been updated to the very latest information that we have, with a particular emphasis on the impact of an aging population — and also to run you through our current growth scenario based on population growth.

This is a scenario based on a complex set of assumptions that the ministry uses to forecast the likely service demands in future years. As you will see from this, it's a scenario that evolves gradually over time. It's not a scenario that takes any sudden leaps. But when you stand back and you look over a period of ten to 20-plus years, you can see that we're going to experience very significant changes in the demand for our services.

Then finally, we want to run you through a series of measures for the overall efficacy of the health care system benchmarked against other provinces.

The first couple of slides — and I start on page 3 — are updates of slides you've seen before. I just wanted to refresh your memory about the population and demographic bubble that we have in B.C.

Demographics catch up on us slowly. They're pretty predictable. This is what we forecast will be happening, and it's the basis for the model that you see here today.

The second slide was just to remind you that the province is going to see very significant changes in the distribution of our elderly population over the course of the next 25 years. I was looking through this a short while ago. I noticed that the biggest jump that we see, in terms of percentage of population 75-plus, is going to go from around 2.5 percent of population in some areas to in excess of 20 percent over a 25-year period.

That's a very significant jump in the demographic profile of areas. Some of this is contributed by younger people moving away from more sparsely populated areas, but certainly those demographics are going to have a very fundamental impact on how we approach delivering health care services in some of the more remote areas of the province. Overall, we're going to see a significant increase in the elderly population demands on the system in each area. Just some are more extreme than others.

At this point I'll hand over to Martha. She's sort of the executive author of this information and is a fount of knowledge, so I encourage members to ask questions if they would like to. If there's further information that you would like after this, we'll endeavour to provide it.

M. Burd: Good morning. One more thing I wanted to say about the population. It's interesting. We tend to think of British Columbia as having the oldest population, but actually Saskatchewan, Nova Scotia and New Brunswick have over 7 percent of their population over 75 today.

Now, that does sound like we're not the oldest population, but when you think that our seniors over 75 total
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326,000 and these other provinces are well under 100,000, it says the bulk of the seniors, in a population where they are a large proportion, are in British Columbia. Of course, Ontario and Quebec have more seniors over the age of 75, but as a proportion of the population, B.C. is certainly leading the group.

It's also interesting to see that if we look at the local health areas that have the highest growth, there are eight that are going to be having more than 20 percent of their population over 75 by the time we get 20 years into the future. They are Keremeos, Kootenay Lake, Princeton, southern Okanagan, Summerland — so we're talking about the Interior — Qualicum, the Gulf Islands and Saanich, for the Vancouver Island areas.

If we move to slide No. 4, where we're looking at who's using the health care systems, we typically start with age. That's because, of all of our databases and all of the characteristics we have about the patient population, age is usually the one characteristic that we commonly have.

So we look at this, and if we look at the size of the circles, the circles are indicating the actual dollar amounts of health care services used by the different age groups. Then the colours are indicating the different types of services they use.

We can see that of the population that are under 65, about 50 percent of the services they use are physicians and PharmaCare. That's the publicly paid prescription drugs. Once we get over 65, then we see the proportion of hospital services, residential care and home support begin to rise so that by the time you get to the 75-plus population, we can see that the physician and drug costs are actually less than a quarter of their total services.

This was really the view that we would have before we started our blue-matrix work. The one thing I need to say is that all through this presentation it's an analysis of about $9 billion, $9.2 billion worth of services. These are the ones that we can track in the ministry on an individual basis and attribute them not only to age groups but also to their health status groups.

Now, the ministry has a wealth of administrative data. Manitoba and British Columbia probably lead the country in terms of being able to take the data and bring it into a single place.

It gives us an incredible overview of the health and the use of health care services, but it does exclude some things, when you think the budget of the ministry is about $17 billion. The categories that are left out are other payments to physicians — those would be salaried physicians — and then the extra payments for on call and rural retention, for example.

In hospital we are missing the hospital costs of emergency room and ambulatory clinic services. In home and community care we're missing things like case management, and we're missing all of the community mental health services.

All of the public health and wellness services provided by the health authorities — things like immunization, homeless shelters, water inspection — are not included in this. Then there are some key services from the Provincial Health Services Authority. The B.C. Cancer Agency and the Renal Agency work is not reflected in the workload measures that we have, and of course, it doesn't include any administration and corporate overhead.

So even though you could say that, well, we're missing a lot of those aspects, the information that we do have is actually quite reflective of the way in which people use health care. It is a wealth of information that we've then gone on to produce what we call the blue matrix, which you've seen before.

In slide No. 6 this is just an overview of our blue matrix. We're about to see a picture of it in the next slide.

The key element is that we're identifying different health status groups in the population. We can look at their use of services. The key is that you're looking across the health system and across time. Where normally you're looking at, say, just physician services, you're missing the fact that people who use physician services are also using other services. They might be using different bundles of services.

If we go to slide No. 7, this is actually our picture of what a blue matrix looks like and why we call it a blue matrix. We have rows where we've divided the population into their health status groups. We've got the columns, which are the different services that they use.

Rather than have all hospital services together, we've got them under things like oncology or gynecology, obstetrics, mental health, palliative care. I've split them out into different types of services that different groups would use. Then the interior cells of the matrix are shaded different colours of blue, reflecting the intensity of the service — either the proportion that are using the service or the dollar amount per user.

We also have a yellow matrix, which are projections. We have a green matrix, which are total dollars. But the words "blue matrix" have sort of stuck. The key is that it's really a unique, innovative way of looking at the population.

If we go on to slide No. 8…. I just need a few slides talking about our population segments. We've divided the population into 13 health status groups. It really reflects their greatest need for health care in the year. You can see that we've got this priority.

We assign a person to any number of pop segments based on the diagnoses that we have in the administrative databases or other information that we have. Then we have to uniquely assign them to one.

For example, if you had a mental health and a substance use issue and cancer, you would be assigned to cancer. But if you had cancer and end of life, you would end up in the end-of-life pop segment.

If we go to slide No. 9, one of the things that we've
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probably made the greatest headway in is looking at chronic conditions. The ministry has looked at 18 different chronic conditions. Obviously, this is only a small subset, but they tend to be a very important subset of chronic conditions.

We can identify that 44 percent of the population, or over two million people, have one or more of these 18 conditions.

M. Farnworth (Deputy Chair): So of everyone that lives in B.C., over 40 percent have one of these.

M. Burd: Yes. Now, part of it is the broad definition for hypertension and depression. If we took depression out alone, we would actually have a much smaller percentage. You could probably take out a good 10 percent with that.

M. Burd: It's astounding. In the first year that we did this, we had one big category for chronic conditions. Then we realized that because of the diversity of them, we needed to split them into different categories.

The primary health care part of the ministry has worked with clinical groups to actually come up with an algorithm that would look for this. For example, for diabetes, they would say if you had two doctor visits in a year for diabetes, or one hospitalization…. They then look at a person's records all the way back to the mid-'90s. If you meet those criteria, then you're put into this — I have to call it — virtual registry.

Then what we've done with something like diabetes…. You then have a way of telling physicians who their patients are who are diabetics. Then there are payments to physicians for maintaining good, quality care for the diabetics, and we can actually then track to see which physicians have actually provided that good, quality care. The primary health care group has done an excellent job of sort of bringing it all together from original analysis right down to front-line delivery of service.

They've got this whole list of chronic conditions. What we did was to work with different parts of the ministry and experts to decide how they should go into the high, medium and low categories. In the beginning we thought it should be, like, one chronic condition, two chronic conditions, three chronic conditions. You'd count the number of chronic conditions that you have. But it was a very strong message that we got that you can't just count. You need to look at which chronic conditions they are. If they are heart failure or dialysis — renal failure — then those are things that affect the entire body, and that automatically puts you in a high complex chronic condition.

We also did statistical analysis to see what combinations would actually lead to medium and high complex chronic conditions.

Then if we go to slide No. 10, we can begin to see why health status is such an important way to look at utilization of health care. The Canadian Institute for Health Information, CIHI, produced a report last year called Seniors and the Health Care System: What is the Impact of Multiple Chronic Conditions? Their conclusion was that multiple chronic conditions, not age, would be the main driver of health care use by seniors.

I've taken the graphs to the right. I've looked at hospital in-patient services per patient and physician fee-for-services per patient. First of all, the top part looks at it by age, and we see that normal gradient. The older-age population is using more services per patient than the younger people. My youngest group shown here is 50 to 64. But if we instead look at it by just those three categories of complex chronic conditions, we can see that the complex chronic conditions actually do a much better job of explaining. I've sort of simplified this graph, because I could also have shown you that within each one of these chronic condition categories there's very little difference between the age groups. The big difference is between the different pop segments that we've got, that we've identified.

It really tells us that we need to pay attention to the chronic conditions, and that's really why, over time, we are focusing on prevention and better care of individuals with chronic conditions.

We go to slide No. 11. This is really one of our big summaries of all the work that we do with the blue matrix. This is probably our most telling table. We take that $9.2 billion worth of services, and we divide it into the different pop segments. This was done on the data for '09-10. First of all, if we look at the share of the population, we can see the non-users. We actually have 13 percent of the population who, in a year, do not touch our health care system. Remember, it is things like physician fee-for-service. If you live in an area where your physicians are on salary, particularly in the north, we would be missing their contact there.

At the other extreme that we see, you would see the frail-in-care, the residential care population, which makes up less than 1 percent of the population. But if you go to the next column over, they use 25 percent of all the services that we can track.

The other columns — physician services, hospital in-patient and day surgery, PharmaCare, publicly funded residential care and the other home and community care services — all add up to 100 percent of what I can track. So out of all of the services that we can track and assign to the pop segments, 19 percent of them are the residential care services that are used by this frail-in-care population. That tells us how important it is to try to keep individuals in their homes for a longer period of time.

Other aha moments we had were the chronic conditions…. As I said, in our first year we had one chronic-
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condition category, but now we've split them into the three. We can see there's a large proportion of the population — 28 percent are in the low complex chronic conditions. They use 13 percent of all the services we can track.

N. Letnick (Chair): Just a question on mental health and substance abuse. Did you have it at a higher percentage before? I seem to recall that it was third after frail-in-care and high complex.

M. Burd: I think you're thinking of the growth rates, which are on the next slide.

M. Burd: It says that, first of all, we assign everybody to a category from the low complex chronic conditions up. Then we're left with all the people who don't have a chronic condition. They didn't fall into the maternity category. They didn't have mental health…. They weren't in residential care. They didn't have cancer. They weren't receiving palliative care.

So we have this whole group, and our whole question was…. Out of that group we can easily identify the non-users. But now we have within that group people who we're going to call healthy and those that use other services. So what we've done is we've defined the healthiest people who use less than $1,500 worth of physician services in a year or $1,000 worth of PharmaCare services.

Everybody else falls into the other major one. It's people who used some hospital services but didn't fall into the other categories. If you had, for example, trauma or you broke your arm, but that was the only thing that happened to you that year, you had some hospitalization from it. As a result, you would end up in the major, all-age category.

N. Letnick (Chair): Since there's a pause, let me ask another question. Could you explain to us again how $9.2 billion, which is 100 percent of the total services measured in that second column, translates well to the full $16 billion or $17 billion that we're currently spending in health care per year?

M. Burd: Right. I put two stars on my particular graph, which says I know that I'm missing the mental health and community services, so I know that when I say 7 percent of the services are used by that mental health and substance use, I know that's an underestimation.

The same thing with cancer. Because the B.C. Cancer Agency is missing, I know that that's an underestimate. The high complex chronic condition would be individuals who are on renal dialysis. We're missing the Renal Agency's workload in that. But when it comes to things like population health, population health is probably used by the entire population. I know it's missing, but it really can't be allocated to just one particular pop segment.

Physician services that are not fee-for-service, again, might be more of a regional thing rather than a particular pop segment that could be allocated. Then, of course, all the administration and capital costs are missing. But other than the cancer and the mental health, I think some of the patterns of services, the age groups of the people who are using the service, the types of bundles of services they use — those are really important sorts of lessons that we can learn from this, even though we know that there are some asterisks for what are missing.

D. Hayer: My question is actually where you cover 44 percent of the B.C. population — 2.01 million people have one or more of 18 chronic conditions: how does that compare to other provinces — that 44 percent — or other states in the U.S. or in the world, or the western part?

M. Burd: Good question. I can't really do a direct comparison because I know that that is only based on these very specific 18 conditions. So usually when we're reading literature about chronic conditions, it's done on a survey basis, and either they've asked the question, "Do you have a chronic condition?" or they have got a much wider range of chronic conditions.

We are the only province that I know of that's actually done this type of virtual chronic condition registry, so I can't easily do that comparison. I think I'd have to go to some other sources of data like the Canadian community health survey. You know, that's not a bad idea to put into my next version of this presentation.

D. Hayer: The second part is the health care utilization chart — same thing. If we want to see a comparison between British Columbia and other provinces or other states, is it the same answer or is it possible to…?

M. Burd: About the same answer. I know that if we were thinking of the vertical part — physician, hospital care, drugs, residential care and home and community care — the Canadian Institute for Health Information produces information on all of the provinces and their health care expenditures, and it estimates the distribution across those five different categories. They do it by age group. What they don't do is do an estimate by the different health status groups. That's really where we've got sort of a unique approach to understanding health care.

N. Letnick (Chair): Sorry, Martha. I think John would like to ask a question.
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J. Rustad: I'm just curious and want to follow up a little bit on the Chair's question with regards to the 45 percent, or thereabouts, of the health care budget that isn't in the table. Phases 2 and 3 of the work that we're going to be doing are looking at potential alternative strategies to mitigate the impact of the baby boomers.

I'm just wondering: with 45 percent of the budget not in this table, how is…? Through the aging population, through the changes that will be in there, are those you're estimating to be static, or are they going to be impacted by changes in demographics like other services are? I'm just wondering how we look at that and what that impact may be.

M. Burd: An aside to this. I've looked at the entire government budget, the Ministry of Health budget, and allocated…. If we look at MSP, we can see the entire budget of MSP, and we can see what's actually been allocated by the physician services. And so we can actually try to allocate the unincluded part, as long as we don't have to do that by geography. That's a little bit more complicated.

I've tried to bring in what parts of the services that aren't here: what can we actually bring in and then apply our current lens to? Then there are things like population health which I can't put the current lens on. You have to sort of stand back and look at it from more of a broad population point of view.

It means that when we've got our growth, the growth is definitely done with the age groups that use these particular services. The question would be: is the age group of the services that we don't have different from those that we do? You'll see in a moment, when we talk about our population growth estimates, that we've really only brought in population projections. It is very key, even within the health status groups, that we understand the different age groups.

Let's imagine that the physicians who are on fee-for-service, the GPs that are on fee-for-service, are all in the north, which has a much younger population. Then the estimates that we're making about the physician services would slightly overestimate it for that group. That's the type of thinking that we're doing.

I wanted to be able to have an overview so that when we said a particular key results area or initiative was going to impact a certain part of the hospital care system…. I wanted to be able to understand what the dollar amount of our budget would be for that. Anyway, there is a lot of other analysis that sits on top of this.

G. Whitmarsh: Maybe I can just have a go at trying to simplify the answer to that. I think we believe that the bulk of the budget that isn't in here follows the trends of what you see within this segment, with a couple of asterisks that Martha pointed to. The other part, I think, is just to do a sort of litmus test on looking at which services are driving our costs in future years.

To be honest, they resonate with us. It's the frail elderly in care. It is multiple chronic conditions. We think that we can use this as a guide to how our services will shift. What we can't do is a definitive measure of the money that is going into services at the moment. There are also, in terms of the future projections, a whole bunch of other assumptions that go into this.

One may want to challenge those assumptions with respect to how we will change health care delivery in the future. But we think that this is indicative. What this allows us to do in managing the system is to focus our attention on particular areas. This helps us do that very specifically, and that's really its value. It is as valuable as any projection is, which is really based on the assumptions that are used to get there.

R. Lee: One question. On page 11, the column on hospital in-patient and day surgery, the last two rows — the frail-in-care and end-of-life — add up to about 7 percent. Could that be reduced if we increase the residential care number?

M. Burd: An important thing to point out with those two numbers is that in our analysis we allocate all the services a person uses in the year to them. So somebody who is in residential care…. It looks like they're using a lot of hospital services. The work that we've done shows that the bulk of those services are used prior to the entry into residential care.

I can't quite say the same thing for end-of-life because those services were probably used during the year when they're actually in palliative care. That, in itself, is not a very expensive service.

What it really points to is that if in fact we had changes in some of our delivery methods…. For example, a senior who goes into hospital and who is treated in a long time period where they could have been in and out faster will be weaker when they come out. They have a greater chance to go into residential care.

Many health authorities have seniors programs where they get into hospital, get them out as fast as possible and get them home with home support. If that is successful, then that will keep them from eventually getting into res care, or certainly res care in that short period of time.

Okay, so if we go on to page 12, this is as we get into the growth in health care. I should say this isn't really a projection; it's a scenario. It says that if the population increases at the rate of the B.C. Stats estimates, this is what the impact would be, but it really keeps our current rate
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of utilization and health status of the population constant, which of course we know is not going to remain constant.

It's important to know that the B.C. Stats population estimates bring in life expectancy, migration, fertility, but also there's an element of economic growth. I think there are some aspects of that population projection which are predictable — like fertility — but there are other parts that are absolutely related to economic growth.

This particular set of slides is based on PEOPLE 36. The newest version of PEOPLE came out last week, and we see that the population estimates are lower than they were before.

What we've done is we've taken our health status group by age and by gender and where they live in the province, and we've applied those population growth rates. Now, this is what we would call the starting point for any discussion of future demand for health care. There are obviously lots of other aspects that could be brought in, and we're working with the health authority modelling group, a little internal group that we have, to try to improve our understanding of future demand growth.

We know that in Canada, B.C. has the highest life expectancy, the lowest smoking rate, the highest rate of activity and fresh fruit and vegetable consumption, the lowest rate of cancer, the highest cancer survival rate. I mean, we are at the extreme best of many measures. So when we ask what the future is: could B.C. become any better, or is it just the geography…? The parts of the province that are not yet best — are they going to move towards the areas that are better?

If we were Newfoundland, which probably has the worst record in any one of those measures, I figure we could look to any other province and say: "If only we could be like Nova Scotia. If only we could be like another province." We would have some goal, some other example we could follow.

In British Columbia it's not going to be that easy. It's going to use a lot of expertise. It's not just a mathematical example. It really is trying to say: "What do we imagine are changes going to be in things like chronic conditions?"

At the same time we know that we're changing the way in which we're delivering services. We have both chronic conditions perhaps increasing, but then our treatment of people with chronic conditions and our prevention methods are also improving.

We're not saying that our projections to 2036 are accurate. We're just saying it's showing you a general direction.

If we move to slide 13, this is the other major insight that we have from our blue matrix. This is showing the growth in the population, and it breaks it down into three different time periods. This is just applying our pop growth.

We can see that between 2011 and 2016 the population growth or the impact is relatively small. That's because our seniors, our first baby boomers, only turned 65 in 2011. We can see that, as the baby boomers begin to enter the older parts of the senior age group, in fact the impact that we see on the growth is much larger.

It's interesting to know that the baby boomers aren't yet over age 85 in this, and we know that the utilization of services rises. So if we were able to project beyond '36, we would probably see a larger increase. It isn't that we're looking for accuracy when we look at this. What it really tells is which populations are going to put that greater burden on the health care system.

This is where you identify the residential care population, individuals with high complex chronic conditions and then the frail in the community. These are individuals who are living in the community. They're not yet in res care. They're not at end-of-life. They don't have a high complex chronic condition. They're requiring support for activities of daily living. Because of the age structure of that population, we expect them to be growing. This is where we're focusing when it comes to our key results areas and our innovation and change agenda.

If we go to slide 14. Many of you could look at this and say: "I don't see what the differences are from the last time you came." The differences are very subtle, and when we look at it at this very high level, it isn't as apparent. We have done work on some of our assumptions that we use in this growth scenario. In terms of the basic story, we can see that the impact of….

J. Rustad: Sorry for interrupting. I’m looking back at slide 13. I was doing some math in my head, which is why I couldn't get the question out quick enough.

J. Rustad: When you look at the total projected growth of 77 percent in terms of the demand for health care by population segment, when we've seen our budget since 2001 more than double…. That's more than 100 percent growth over a decade. We're looking at 25 years out only being at 77 percent growth. Are you suggesting that the actual growth in that…?

Mind you, costs are different than demand, of course, because costs escalate over time. But when you look at what that growth projection has been, I guess the question is: what was the growth change — I know what the budget change was — between 2001 and today versus where it's projected to grow over the next 25 years?

M. Burd: So when we look at the next slide, and we see that the population growth is really only…. It's less than this today because of the new population estimates. So
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this one would say that pop growth and aging would be like maybe under 2.4 percent per year. That's all that one is reflecting, but the total budget of the health care system is reflecting all the other aspects that are in slide 14.

M. Burd: If we look at slide 14, this really parallels much of the work that the committee has done, where we see that the impact of the population is a relatively small proportion of the total change over time. We can have a lot of debate about the impact of utilization. We don't really like doing historical regression analyses because so many policies have changed. You have some years a very high growth and then very slow growth, as we've actually changed our complex care criteria for admission into res care. So that's from literature. But I can't say that I actually….

M. Farnworth (Deputy Chair): Would that also include things such as changes in treatments and diagnostic techniques?

M. Burd: Absolutely. This 0.9 for utilization is supposed to represent changes in technology, changes in the way we deliver service, so that on an individual per-capita basis, you're using a different amount of service. It could be different types of services, but I think it's really just the placeholder for the idea that things are going to change.

When it comes to general inflation, that tends to come directly from the Bank of Canada. You've used the same numbers in your work.

Then health care–related inflation. Where in the past we would have said something like 0.7, our analysts have looked back at data and said: "You know, it really depends on what time period you're looking at, what policies have changed." They've actually done some work where, over time, physicians' services and PharmaCare have actually been closer to the zero percent growth rate, but it has a lot to do with what our policies are going to be in the future. What's the impact of our generic drug costs and agreements that we have with physicians?

M. Farnworth (Deputy Chair): Now, when you say "the health-related inflation," that's over and above the standard…

M. Burd: It's on that assumption — that health care has a higher rate of inflation in general. But in the last few years when you look at the data, you can begin to debate, just because we've tended to have relatively stable inflation and we've had some significant policies that have reduced some of the health care one. But as a general placeholder for the future, it's probably not unrealistic to put it in that range.

G. Whitmarsh: Maybe just to reflect back on MLA Rustad's question around the budget, slide 14 shows you that we forecast, based on this set of assumptions and projections, for it to triple over that period of time, when the services driven by population alone will rise by an average of 77 percent. That 77 percent number does not increase our confidence in not having the budget go up substantially over a period of time.

N. Letnick (Chair): Let me jump right in before you move on. You just said "triple." Do you have that anywhere else in the presentation? Is that what you project over 25 years?

G. Whitmarsh: I was simply picking the numbers off slide 14, from where we are today at around $16 billion, getting up to — I can't quite draw the line across — something in the high 50s.

G. Whitmarsh: We included in here three measures of financial sustainability for our system. I know that when we visited last time there was a pretty lengthy discussion around sustainability. I would suggest that from any government's perspective, sustainability is ultimately measured in the ability to afford it. What we did here was to take three benchmark measures — gross domestic product, as a percentage of government expenditures, and expenditures per capita — just to give you a sense of where we are.

On slide 16 you'll see our expense per capita. The slide bars there are relative to other provinces. You will see that over a period of time we have performed relatively well if you measure success by this measure. It's the amount that we expend per head of population. We've actually moved down to being the second most efficient system measured by this measure, spending around just over $3,500 a head, on average. That has obviously shifted substantially over the past decade.

On slide 17 you'll see it as a percentage of GDP. Again, benchmarked by this measure, we have gradually improved, relative to other provinces. Obviously, during this period B.C. itself has seen fairly significant improvements in GDP. Underlying that premise, of course, is that wealthier economies are generally expected to spend more on health care, and there will have been that general rise over this period of time.
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N. Letnick (Chair): Before you go on to the next one, Graham, just if I may, especially since you have such great experience in the Ministry of Finance…. If we looked at the future GDP rate, where would be the best place to find projections for the same 25-year period that we're looking at the projections for health care costs?

G. Whitmarsh: We could probably go and do that. We would have to find a satisfactory set of future GDP projections by province and then benchmark that against our own forecasts.

M. Burd: Right. We have not found any future GDP projections beyond the ones that are in the blue book or the financial plan. Those are the same ones that you've been using. Especially when we try to go across the country, there's nothing standard for that.

G. Whitmarsh: You would probably be left with using something of an estimate going forward, based on a look at the average growth historically over a 25-year period. That in itself could be fundamentally distorted by any major shifts in the economy — around, for example, new resource extraction or something like that.

M. Burd: I think that in some of the work that KPMG did…. When they looked at the variation in GDP over the past 15 years' worth, I think they probably had, of data, we see this rise and fall. Could we have predicted any of that if we were 15 years back? So if we think that our population estimates have a little confidence interval around them, I would think any projections of GDP 25 years out would have a huge confidence interval.

I think in some ways we can get too hung up on the actual number 25 years out. When I look at my slide 14, I think it's just there as a benchmark. I think it's just there to say that some things are going to be within our control, and some things are not going to be within our control. We need to focus on them today, because we can't wait 25 years and then think we're going to do something about it.

The fact that we focus on change today means that whatever we've put into our scenario is, again, not going to be what we see 25 years out.

N. Letnick (Chair): Right. And I agree that it does give us that star to look at these different areas and try to address them early rather than wait until they become acute later on — which is actually the whole issue behind chronic care conditions, right?

But since the slide is here, looking at B.C. government health expenditures versus a percentage of GDP, and since the majority of the work that we have in front of us, from your presentation this morning, is about projecting cost to the system, I think it's valuable to understand how much revenue will be available to governments in the future to be able to afford the percentage increase that we're projecting.

So for example, if you look at your total cost increases that are projected, we're talking about 5 to 6 percent nominal per year — right? If we have about 5 to 6 percent GDP increase nominal per year, then yes, we have to work to make the system better — improve patient outcomes, health care and all the rest of it. But the sustainability question is a little more mute, because our economy is increasing roughly at the same rate as the rate of growth for the cost of health care.

But if the Conference Board of Canada or somebody else, for example, is projecting we're only going to have a nominal 3 or 4 percent increase in GDP for the next 25 years, then we have a more serious problem than if they come back and say 5 or 6, or 7 or 8.

So that's what I'm trying to wrap my head around. Taking health care increases on their own is fine, and we have to focus attention on improving the outcomes for patients and their experience and accessibility and reducing the increase in the cost curve. But when we put that juxtaposed against the increase in the economy, it puts a different light on how urgent the question is.

G. Whitmarsh: No, and you're correct. The historical problem, if you like, of health care gradually consuming more of the provincial budget has come out of that — that health care has risen at about a 1 percent or 1½ percent greater rate than nominal GDP. Consequently, it has gradually eaten up more and more of the government budget because the government budget typically follows nominal GDP.

You know, I think there are three measures here. There's cost per capita, there's GDP, and there's the percentage of government revenue. It's a decision a government could make about whether to benchmark what it invests in health care on an amount per person, an amount in terms of the size of the economy or an amount in terms of the size of overall government revenues. They drive, potentially, quite different outcomes in terms of the amount of money that you would have available to spend on health care.

The other part that has become evident to me in my time here is that this is a demand-driven system. At the end of the day, we do not have the controls to stop usage of the system, so we are left to implement policy changes with the forecasts of what the impact is and then see what happens after a period of time.

In a lot of ways, thinking that we can control the expenditure by setting benchmarks against any of these isn't quite true because the people using the system decide if they want to use it; we don't. These are meant to give some perspectives around the different scenarios. Ultimately, if we could manage the growth in health care at the same rate of nominal GDP, in effect we would reach a stable condition, if we continue to evolve the system at the same rate that it has evolved in the past.
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As Martha says, this doesn't take into account future policy changes. But historical data does take into account changes that happen, so if one assumes that we continue to change at the same rate, then you're kind of settled in the middle ground. From my perspective, it is a fascinating question. But if we could close that 1 percent to 1½ percent gap, then, in effect, you have a stable system at that point.

The other piece of information when you link it to, I think, slide 18, which is government provincial expenditures, is: what in the future is the future long-term projection of government expenditures? Different revenue sources for governments grow at different rates. I think this is an area where more work in future may be required to make sure that the tax base that we're working on is one that is going to grow in line with nominal GDP. Over a 25-year period, if it is not, then, you are creating a gradually growing elephant in the room around affording health care.

Of course, different taxes do grow at different rates, and there's a lot of information available about what that is. The fascinating thing for me — I only looked at it very cursorily when I was at Finance — is that, predominantly, the federal government's revenues grow at a faster rate than the provincial revenues. They're more linked to the types of revenue — personal income and tax on services, for example — which grow at higher rates.

This is a more integrated approach that probably needs to be taken in these long-term projections. It's actually breaking the revenue down by what it's likely to grow at to make sure that you're balanced against the likely growth of demand in the health system.

Slide 18 is the one against provincial revenue. This is benchmarked against total government revenue. I could argue it would be better to do it against the consolidated revenue fund, which is a smaller number that actually puts the percentage significantly higher. That's because it's the government's own-source revenue, within the control of the government to actually….

M. Farnworth (Deputy Chair): So that would include transfer payments, then, like the health accord and things like that?

G. Whitmarsh: That would include transfer payments. That would not include things like, for example, fees that students pay to post-secondary education and other money that's within our overall budget, but not so directly within our control.

Again, on the basis of percentage of government expenditures, over time we've slightly improved relatively. But if you look at the consolidated revenue fund, we're right at about 49 or 50 percent of expenditures going to health care.

So that was all we were proposing to go through. As I say, we're happy to follow up or return or answer further questions as the committee sees fit.

M. Stilwell: I just had a question plus comment about costs, and you kind of alluded to it, for instance, around students. We're not capturing the rising private costs of health care that are imposed — certainly, imposed upon patients' minds — in terms of rising health care costs. For example, at the new outpatient clinic facility in Surrey the parking is very expensive, and that's had a significant effect on utilization. In fact, the average patient might pay more than the $8 for an appointment, which could be a substantial percentage of the doctors' fees, for example, and then if they go to an orthopedic clinic and they buy a sling for $30….

I'm not suggesting a solution, but I'm suggesting…. If you're talking about patient perception of costs and putting a hold on those, offloading fees happens all the time, but government policies don't necessarily see or capture that in a way that is best for outcomes.

G. Whitmarsh: You're correct. Certainly in terms of parking fees, they are captured in the government revenue in the broader number, because they're non-own-source revenue, and I believe they are counted in the health authorities. This is a look at the publicly funded system of health care.

M. Stilwell: Right. I guess what I'm saying is that that's effectively a user fee, and if you look at the age groups that have fallen off on attendance at outpatient facilities, I bet it's the age group we're looking at.

G. Whitmarsh: Yeah. Part of the challenge here, I think, is trying to analyze a problem that actually you can see some solutions to, because one of the things I've noticed is that once you get out to that broader scenario, it's very, very hard to see how to move forward.

M. Stilwell: Yeah. Obviously there are lots of fees that are not in our control.

D. Hayer: Actually, thank you, Moira, for bringing up the parking lot issue. My mom had a heart issue, and I was at the Surrey outpatient hospital. Everybody's really happy about it — the health care professionals, the workers there and the patients — except for the parking part. My mom was complaining. She said: "Look, it's lots of money." Everybody else I talk to…. Some people have to go. They go home and come back again, so they're spending twice as much gas. Otherwise they're parking on other streets far away. They said they don't mind paying as long as the prices are reasonable for parking, and I'm glad this issue is here to deal with at the Ministry of Health.

Since you were with Finance before, maybe we can try
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to find some sort of reasonable solution. I don't know what that is, because of the challenges with the budget, but on the other hand, the prices seem to be not reasonable. Before, they used to have…. You came in for 15 or 20 minutes and there was no charge for it, but now, I think, as soon as you go in, you've got to pay. If you have to go in for five minutes to drop off, you have to pay a minimum pay. I think somebody should try to take a look at it and find some workable solution that everybody can feel happy about.

G. Whitmarsh: I can tell you that every dollar that's raised in parking fees is back into services. The balloon is only a certain size. You could have no parking fees whatsoever, and if the government is willing to share with me another 30-plus million dollars, it would all balance out nicely.

Seeing none, thank you, again, very much for the update. I appreciate that. Thank you for permission to include your appendix in the copy of our report.

At this point we are going to switch over to the KPMG report. I would entertain a motion to go in camera. Moved by Mike.

N. Letnick (Chair): The first motion, then, is to receive the report of KPMG. Is that the terminology you'd like me to use — to receive it?

N. Letnick (Chair): Adopt the report? That's different. How about we receive the report of KPMG?

N. Letnick (Chair): I'd like to express my thank-you to the people at KPMG for their report. It will now be included in our report as an addendum and the items in the report referred to in our report.

The second motion is to set up a subcommittee of the Chair and Deputy Chair to review the framing for public submissions during phase 2.

S. Sourial (Committee Clerk): I don't know if you want to adopt this or wait till….

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Chair:	* Norm Letnick (Kelowna–Lake Country BC Liberal)
Deputy Chair:	* Mike Farnworth (Port Coquitlam NDP)
Members:	Ron Cantelon (Parksville-Qualicum BC Liberal)
	Katrine Conroy (Kootenay West NDP)
	Guy Gentner (Delta North NDP)
	* Sue Hammell (Surrey–Green Timbers NDP)
	Colin Hansen (Vancouver-Quilchena BC Liberal)
	* Dave S. Hayer (Surrey-Tynehead BC Liberal)
	* Richard T. Lee (Burnaby North BC Liberal)
	* John Rustad (Nechako Lakes BC Liberal)
	* Dr. Moira Stilwell (Vancouver-Langara BC Liberal)
	* denotes member present
Clerk:	Susan Sourial
Committee Staff:	Dirk van Duyn (Committee Research Analyst)

Witnesses:	Martha Burd (Ministry of Health)
	Graham Whitmarsh (Deputy Minister of Health)

REPORT OF PROCEEDINGS (Hansard)

SELECT STANDING COMMITTEE ON HEALTH

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
HEALTH